776 SUPREME COURT REPORTS ANNOTATED

Duty Free Philippines vs. Mojica

49
DUTY FREE PHILIPPINES, petitioner, vs. ROSSANO J. MOJICA, respondent.

Public Officers; Civil Service; Duty Free Philippines (DFP); Labor Law; Jurisdictions; An
employee of the Duty Free Philippines (DFP) is a civil service employee, and jurisdiction over his
dismissal is lodged with the Civil Service Commission, not the National Labor Relations Commission;
DFP was created under Executive Order No. 46 primarily to augment the service facilities for tourists
and to generate foreign exchange and revenue for the government.—Respondent Mojica is a civil
service employee; therefore, jurisdiction is lodged not with the NLRC, but with the Civil Service
Commission. DFP was created under Executive Order (EO) No. 46 on September 4, 1986 primarily to
augment the service facilities for tourists and to generate foreign exchange and revenue for the
government. In order for the government to exercise direct and effective control and regulation over
the tax and duty free shops, their establishment and operation was vested in the Ministry, now
Department of Tourism (DOT), through its implementing arm, the Philippine Tourism Authority
(PTA). All the net profits from the merchandising operations of the shops accrued to the DOT. As
provided under Presidential Decree (PD) No. 564, PTA is a corporate body attached to the DOT. As
an
_______________

* FIRST DIVISION.

777

VOL. 471, SEPTEMBER 30, 2005 77

7
Duty Free Philippines vs. Mojica
attached agency, the recruitment, transfer, promotion and dismissal of all its personnel was
governed by a merit system established in accordance with the civil service rules. In fact, all PTA
officials and employees are subject to the Civil Service rules and regulations. Accordingly, since DFP
is under the exclusive authority of the PTA, it follows that its officials and employees are likewise
subject to the Civil Service rules and regulations. Clearly then, Mojica’s recourse to the Labor
Arbiter was not proper. He should have followed the procedure laid down in DFP’s merit system and
the Civil Service rules and regulations.
Same; Same; Same; Administrative Law; The Administrative Code of 1987 (E.O. No. 292)
empowered the Civil Service Commission to hear and decide administrative cases instituted by or
brought before it directly or on appeal, including contested appointments, and review decisions and
actions of its offices and of the agencies attached to it.—Presidential Decree No. 807 or The Civil
Service Decree of the Philippines declared that the Civil Service Commission shall be the central
personnel agency to set standards and to enforce the laws governing the discipline of civil servants.
It categorically described the scope of Civil Service as embracing every branch, agency, subdivision,
and instrumentality of the government, including every government-owned or controlled corporation
whether performing governmental or proprietary function. It construed an agency to mean any
bureau, office, commission, administration, board, committee, institute, corporation, whether
performing governmental or proprietary function, or any other unit of the National Government, as
well as provincial, city or municipal government, except as otherwise provided. Subsequently, EO
No. 180 defined “government employees” as all employees of all branches, subdivisions,
instrumentalities, and agencies, of the Government, including government-owned or controlled
corporations with original charters. It provided that the Civil Service and labor laws shall be
followed in the resolution of complaints, grievances and cases involving government employees. EO
No. 292 or The Administrative Code of 1987 empowered the Civil Service Commission to hear and
decide administrative cases instituted by or brought before it directly or on appeal, including
contested appointments, and review decisions and actions of its offices and of the agencies attached
to it.
778

7 SUPREME COURT REPORTS ANNOTATED

78
Duty Free Philippines vs. Mojica
Same; Same; Same; Same; Civil service employees have the right to present their complaints or
grievances to management and have them adjudicated as expeditiously as possible in the best interest
of the agency, the government as a whole, and the employee concerned, and in case any dispute
remains unresolved after exhausting all the available remedies under existing laws and procedure,
the parties may jointly refer the dispute to the Public Sector Labor Management Council for
appropriate action.—Executive Order No. 292 provided that civil service employees have the right to
present their complaints or grievances to management and have them adjudicated as expeditiously
as possible in the best interest of the agency, the government as a whole, and the employee
concerned. Such complaint or grievances shall be resolved at the lowest possible level in the
department or agency, as the case may be, and the employee shall have the right to appeal such
decision to higher authorities. In case any dispute remains unresolved after exhausting all the
available remedies under existing laws and procedure, the parties may jointly refer the dispute in
the Public Sector Labor Management Council for appropriate action. In sum, the labor arbiter and
the NLRC erred in taking cognizance of the complaint as jurisdiction over the complaint for illegal
dismissal is lodged with the Civil Service Commission. The Court of Appeals likewise erred in
sustaining the labor arbiter.

PETITION for review on certiorari of the decision and resolution of the Court of Appeals.

The facts are stated in the opinion of the Court.

Office of the Government Corporate Counsel for petitioner.

YNARES-SANTIAGO, J.:

This petition for review on certiorari 1 under Rule 45 of the Rules of Court seeks to annul and set
aside the August 31, 2004 Decision2 of the Court of Appeals in CA-G.R. SP No.
_______________

Rollo, pp. 12-45.

1

Id., at pp. 50-61. Penned by Associate Justice Delilah Vidallon-Magtolis and concurred in by
2

Associate Justices Eliezer R. De Los Santos and Arturo D. Brion.

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Duty Free Philippines vs. Mojica
76995, and its December 13, 2004 Resolution 3 denying the motion for reconsideration.
The antecedent facts show that on November 28, 1997, the Discipline Committee of Duty Free
Philippines (DFP) rendered a decision 4 in DISCOM Case No. 97-027 finding Stock Clerk Rossano A.
Mojica guilty of Neglect of Duty by causing considerable damage to or loss of materials, assets and
property of DFP. Thus, Mojica was considered forcibly resigned from the service with forfeiture of all
benefits except his salary and the monetary value of the accrued leave credits. 5
 Mojica was formally informed of his forced resignation on January 14, 1998. Thereupon, he filed a
complaint for illegal dismissal with prayer for reinstatement, payment of full back wages, damages,
and attorney’s fees, against DFP before the National Labor Relations Commission (NLRC).
On February 2, 2000, Labor Arbiter Facundo L. Leda rendered a Decision finding that Mojica was
illegally dismissed. The dispositive portion of the Decision reads:
“WHEREFORE, decision is hereby rendered declaring the dismissal of complainant Rossano J.
Mojica to be illegal such that respondent Duty Free Philippines is directed to reinstate him to his
former or substantially equivalent position without loss of seniority rights and other privileges and
to pay him the amount of TWO HUNDRED FIFTY NINE THOUSAND SEVENTEEN PESOS &
08/100 (P259,017.08) representing his backwages and attorney’s fees, both awards being subject to
further computation until actual reinstatement.
SO ORDERED.”6

The NLRC reversed the ruling of the arbiter. It found that the dismissal was valid and with just
cause.
_______________

3 Id., at p. 63.
4 Id., at pp. 117-128.
5 CA Rollo, p. 87.
6 Rollo, pp. 76-77.

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Duty Free Philippines vs. Mojica
Mojica’s motion for reconsideration was denied, 7 hence he filed a Petition for Certiorari under Rule
65 of the Rules of Court before the Court of Appeals, docketed as CA-G.R. SP No. 76995.
The appellate court agreed with the arbiter that Mojica was not guilty of gross or habitual
negligence that would warrant his dismissal. It found that there was no convincing evidence to prove
that Mojica connived with other personnel in pilfering the stocks of DFP.
Hence, this petition.
Respondent Mojica is a civil service employee; therefore, jurisdiction is lodged not with the
NLRC, but with the Civil Service Commission.
DFP was created under Executive Order (EO) No. 468 on September 4, 1986 primarily to
augment the service facilities for tourists and to generate foreign exchange and revenue for the
government. In order for the government to exercise direct and effective control and regulation over
the tax and duty free shops, their establishment and operation was vested in the Ministry, now
Department of Tourism (DOT), through its implementing arm, the Philippine Tourism Authority
(PTA).9 All the net profits from the merchandising operations of the shops accrued to the DOT.
As provided under Presidential Decree (PD) No. 564, 10PTA is a corporate body attached to the
DOT. As an attached agency, the recruitment, transfer, promotion and dismissal of
_______________

Id., at p. 92.
7

GRANTING THE MINISTRY OF TOURISM, THROUGH THE PHILIPPINE TOURISM

8

AUTHORITY (PTA), AUTHORITY TO ESTABLISH AND OPERATE A DUTY AND TAX FREE
MERCHANDISING SYSTEM IN THE PHILIPPINES.
9 Section 1, E.O. No. 46.
10 REVISING THE CHARTER OF THE PHILIPPINE TOURISM AUTHORITY CREATED

UNDER PRESIDENTIAL DECREE NO. 189, DATED MAY 11, 1973.

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 Duty Free Philippines vs. Mojica
all its personnel was governed by a merit system established in accordance with the civil service
rules.11 In fact, all PTA officials and employees are subject to the Civil Service rules and
regulations.12
Accordingly, since DFP is under the exclusive authority of the PTA, it follows that its officials and
employees are likewise subject to the Civil Service rules and regulations. Clearly then, Mojica’s
recourse to the Labor Arbiter was not proper. He should have followed the procedure laid down in
DFP’s merit system and the Civil Service rules and regulations.
PD No. 807 or The Civil Service Decree of the Philippines 13 declared that the Civil Service
Commission shall be the central personnel agency to set standards and to enforce the laws governing
the discipline of civil servants.14 It categorically described the scope of Civil Service as embracing
every branch, agency, subdivision, and instrumentality of the government, including every
government-owned or controlled corporation whether performing governmental or proprietary
function.15 It construed an agency to mean any bureau, office, commission, administration, board,
committee, institute, corporation, whether performing governmental or proprietary function, or any
other unit of the National Government, as well as provincial, city or municipal government, except
as otherwise provided.16
_______________

Section 28, P.D. No. 564.

11

Section 29, Id.

12
13 Took effect on October 6, 1975. Superseded Republic Act No. 2260 or The Civil Service Act of

1959.
14 Section 2, Art. II, PD No. 807.
15 Section 4, Art. IV, Id.
16 Section 3, Art. III, Id.

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Duty Free Philippines vs. Mojica
Subsequently, EO No. 18017 defined “government employees” as all employees of all branches,
subdivisions, instrumentalities, and agencies, of the Government, including government-owned or
controlled corporations with original charters. 18 It provided that the Civil Service and labor laws
shall be followed in the resolution of complaints, grievances and cases involving government
employees.19
EO No. 292 or The Administrative Code of 1987empowered the Civil Service Commission to hear
and decide administrative cases instituted by or brought before it directly or on appeal, including
contested appointments, and review decisions and actions of its offices and of the agencies attached
to it.20
Thus, we held in Zamboanga City Water District v. Buat21 that:
There is no dispute that petitioner, a water district with an original charter, is a government-owned
and controlled corporation. The established rule is that the hiring and firing of employees of
government-owned and controlled corporations are governed by provisions of the Civil Service Law
and Civil Service Rules and Regulations. Jurisdiction over the strike and the dismissal of private
respondents is therefore lodged not with the NLRC but with the Civil Service Commission. (Citations
omitted)

In Philippine Amusement and Gaming Corp. v. Court of Appeals22 we also held that:
_______________

PROVIDING GUIDELINES FOR THE EXERCISE OF THE RIGHT TO ORGANIZE OF

17

GOVERNMENT EMPLOYEES, CREATING A PUBLIC SECTOR LABOR-MANAGEMENT

COUNCIL, AND FOR OTHER PURPOSES. Took effect June 1, 1987.
 18 Section 1, E.O. No. 180.
19 Section 16, Id.
20 Section 12(11), Chapter 3, Book V, EO No. 292.
21 G.R. No. 104389, May 27, 1994, 232 SCRA 587, 591.
22 G.R. No. 93396, September 30, 1991, 202 SCRA 191, 194.

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Duty Free Philippines vs. Mojica
It is now settled that, conformably to Article IX-B, Section 2(1), [of the 1987 Constitution]
government-owned or controlled corporations shall be considered part of the Civil Service only if they
have original charters, as distinguished from those created under general law.
PAGCOR belongs to the Civil Service because it was created directly by PD 1869 on July 11,
1983. Consequently, controversies concerning the relations of the employee with the management of
PAGCOR should come under the jurisdiction of the Merit System Protection Board and the Civil
Service Commission, conformably to the Administrative Code of 1987.
Section 16(2) of the said Code vest in the Merit System Protection Board the power inter alia to:
a) Hear and decide on appeal administrative cases involving officials and employees of the Civil
Service. Its decision shall be final except those involving dismissal or separation from the service
which may be appealed to the Commission.
Applying this rule, we have upheld the jurisdiction of Civil Service Authorities, as against that of
the labor authorities, in controversies involving the terms of employment, and other related issues,
of the Civil Service official and employees...

EO No. 292 provided that civil service employees have the right to present their complaints or
grievances to management and have them adjudicated as expeditiously as possible in the best
interest of the agency, the government as a whole, and the employee concerned. Such complaint or
grievances shall be resolved at the lowest possible level in the department or agency, as the case may
be, and the employee shall have the right to appeal such decision to higher authorities. In case any
dispute remains unresolved after exhausting all the available remedies under existing laws and
procedure, the parties may jointly refer the dispute in the Public Sector Labor Management Council
for appropriate action.23
In sum, the labor arbiter and the NLRC erred in taking cognizance of the complaint as
jurisdiction over the complaint
_______________

23 Section 27, Chapter 5, Book V, EO No. 292.

784
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Duty Free Philippines vs. Mojica
for illegal dismissal is lodged with the Civil Service Commission. The Court of Appeals likewise erred
in sustaining the labor arbiter.
WHEREFORE, the August 31, 2004 Decision of the Court of Appeals in CA-G.R. SP No. 76995;
and its December 13, 2004 Resolution, are ANNULLED and SET ASIDE. The complaint for illegal
dismissal with prayer for reinstatement, payment of backwages and attorney’s fees, is DISMISSED.
SO ORDERED.
Davide, Jr. (C.J., Chairman), Quisumbing, Carpioand Azcuna, JJ., concur.

Judgment and resolution annulled and set aside.

Notes.—Compliance with the legal requirements for an appointment to a civil service position is
essential in order to make it fully effective, and until an appointment has become a completed act, it
would be precipitate to invoke the rule on security of tenure. (Tomali vs. Civil Service
Commission, 238 SCRA 572 [1994])
The Civil Service and labor laws and procedures, whenever applicable, shall be followed in the
resolution of complaints, grievances and cases involving government employees, and the Bureau of
Labor Relations has original and exclusive authority to act on all inter-union and intra-union
conflicts. (Bautista vs. Court of Appeals, 452 SCRA 406 [2005])